Titimangsa

Wednesday, 30 November 2011

Geneva, December 1, 2011
(Washington DC, November 30, 2011 8pm) – Remittance flows to developing
countries are expected to total $351 billion this year, and worldwide
remittances, including those to high-income countries, will reach $406
billion for the current calendar year, according to a newly updated
World Bank brief on global migration and remittances.

The
top recipients of officially recorded remittances, estimated for 2011,
are India ($58 billion), China ($57 billion), Mexico ($24 billion), and
the Philippines ($23 billion). Other large recipients include Pakistan,
Bangladesh, Nigeria, Vietnam, Egypt and Lebanon.

While
the economic slowdown is dampening employment prospects for migrant
workers in some high-income countries, global remittances, nevertheless,
are expected to stay on a growth path and, by 2014, are forecast to
reach $515 billion. Of that, $441 billion will flow to developing
countries, according to the latest issue of the Bank’s Migration and
Development Brief, released today at the fifth meeting of the Global
Forum on Migration and Development in Geneva.

“Despite
the global economic crisis that has impacted private capital flows,
remittance flows to developing countries have remained resilient,
posting an estimated growth of 8 percent in 2011,” said Hans Timmer, Director of the Bank’s Development Prospects Group. “Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.”

High
oil prices have helped provide a cushion for remittances to Central
Asia from Russia and to South and East Asia from the Gulf Cooperation
Council (GCC) countries. Also, a depreciation of currencies of some
large migrant-exporting countries (including Mexico, India and
Bangladesh) created additional incentives for remittances as goods and
services in these countries became cheaper in U.S. dollar terms.

Remittance
flows to four of the six World Bank-designated developing regions grew
faster than expected --- by 11 percent to Eastern Europe and Central
Asia, 10.1 percent to South Asia, 7.6 percent to East Asia and Pacific
and 7.4 percent to Sub-Saharan Africa, despite the difficult economic
conditions in Europe and other destinations of African migrants.

In
contrast, growth in remittance flows to Latin America and the
Caribbean, at 7 percent, was lower than expected due to continuing
weakness in the U.S. economy, while the Middle East and North Africa,
affected by civil conflict and unrest related to the “Arab Spring”,
registered the slowest growth (2.6 percent) among developing regions.

The
Bank expects continued growth in remittance flows going forward, by 7.3
percent in 2012, 7.9 percent in 2013 and 8.4 percent in 2014.

There
are, however, some serious downside risks to the Bank’s outlook for
international remittance and migration flows. Persistent unemployment in
Europe and the U.S. is affecting employment prospects of existing
migrants and hardening political attitudes toward new immigration.
Volatile exchange rates and uncertainty about the direction of oil
prices also present further risks to the outlook for remittances.

More
recently, some of the GCC countries, which are critically dependent on
migrant workers, are considering tighter quotas for migrant workers to
protect jobs for their own citizens.

“Such policies may impact remittance flows to developing countries in the longer term,” said Dilip Ratha, Manager of the Bank’s Migration and Remittances Unit and a co-author of the Migration and Development Brief. “But in the medium-term the risk of disruption to these flows is relatively low.”

Remittance
flows would receive a further boost if the global development community
achieves the agreed objective of reducing global average remittance
costs by 5 percentage points in 5 years (the ’5 by 5’ objective of the
G8 and the G20).

Remittance
costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in
the third quarter of 2011 due to increasing competition in large volume
remittance corridors such as UK-Nigeria and UAE-India. However,
remittance costs continue to remain high, especially in Africa and in
small nations where remittances provide a life line to the poor.

“In
addition to streamlining regulations governing remittance service
providers, there is a pressing need to improve data on remittance market
size at the national and bilateral corridor level,” said Ratha. “That will stimulate market competition and also help in more accurate monitoring of progress towards the ‘5 by 5’ objective.”

The
World Bank has made considerable strides in developing financing
instruments for leveraging migration and remittances for national
development purposes. Diaspora bonds can be a powerful financial
instrument for mobilizing diaspora savings to finance specific public
and private sector projects, as well as to help improve the debt profile
of the destination country. The Bank has established a Task Force on
the Implementation of Diaspora Bonds to facilitate the provision of
technical assistance to developing country governments.

“The
Bank now houses considerable expertise in this area and we look forward
to working with client governments in developing alternative sources of
financing for development projects,” said Ratha.